NC Republican leaders, Gov. Cooper reach compromise on controversial energy bill
Duke Energy would be able to lock in rate increases over a three-year period under a compromise N.C. Senate Republicans and Gov. Roy Cooper struck this week on a piece of controversial energy legislation.
The revised version of House Bill 951, which currently sits in Senate committee, would allow Duke to request as much as 4% increases in each of the second and third years of a multi-year rate-making process. Currently, rates are established one year at a time.
The new version of the legislation, which was negotiated behind closed doors in recent weeks, would make the greenhouse gas reduction goals outlined in the Cooper administration’s Clean Energy Plan into law. In return, the bill would give Duke Energy, the state’s dominant utility, a win it has long sought on multi-year rate-making despite the concerns of many of the state’s most prominent businesses and energy advocates.
Cooper and a bipartisan group of legislative leaders released statements together Friday afternoon touting the energy legislation, a compromise that comes even as legislative leaders and Cooper’s office enter conversations over the state budget.
“This bipartisan agreement sets a clean energy course for North Carolina’s future that is better for the economy, better for the environment, and better for the pocketbooks of everyday North Carolinians,” Cooper said in a statement.
The Clean Energy Plan established targets of 70% reductions in power-sector greenhouse gas emissions by 2030 and carbon neutrality by 2050. But earlier versions of House Bill 951 that focused primarily on which coal-fired power plants to close would have resulted in a 61% reduction, short of that goal.
“Legislative leaders on both sides of the aisle recognize the opportunity in front of us to move away from coal and accelerate a clean energy transition for our state,” Bill Norton, a Duke Energy spokesman, said in a written statement.
Under the revised legislation, regulators from the N.C. Utilities Commission would guide how Duke reaches the greenhouse gas emissions targets by developing carbon reduction plans every two years. The first version of the plan would be due by the end of 2022.
The Utilities Commission would need to ensure that any changes in energy sources would guarantee power reliability. Additionally, the plan would need to include the cheapest energy sources that would achieve the mandated greenhouse gas reductions.
“North Carolina is a growing state, attracting businesses and families from all over. That growth depends on a stable supply of reliable and affordable energy,” Senate President Pro Tempore Phil Berger said in a written statement, adding that the agreement signals a commitment to “pro-growth energy policies.”
The Utilities Commission would be able to push the greenhouse gas targets back by as much as two years in most situations and further if the delays are due to permitting or grid modifications necessitated by the construction of a nuclear power plant or wind farm.
Some parts of the bill that the House passed that were not included in the compromise version were a provision allowing Duke Energy to charge ratepayers $50 million to try to find a location for an experimental nuclear reactor and another prohibiting North Carolina from entering the cap-and-trade Regional Greenhouse Gas Initiative.
The compromise legislation is expected to move through committees next week and receive a floor vote in the Senate on Thursday. Due to the changes, the House would also need to approve the revised legislation.
“I haven’t seen the language yet, but the discussions that I have had, it looks like a lot of concerns that our caucus had have been addressed in this bill,” said Republican House Majority leader John Bell, of Goldsboro.
Democrats are expected to vote for the bill, but some wariness remained.
“We all know this was about Duke wanting multi-year rate making, and this is how they were going to get it,” Rep. Pricey Harrison, a Greensboro Democrat, told The News & Observer.
The compromise legislation could pose problems for low-income customers, said Al Ripley, director of the N.C. Justice Center’s Consumer, Housing and Energy Project. Those concerns largely revolve around the multi-year rate making process in which Duke can ask for increases of up to 4% in each of the second and third years of a rate-making cycle.
“We are very concerned that this bill will increase rates that low-income people cannot afford, and there is not an adequate program to help low-income people deal with these dynamics included in the legislation,” Ripley said.
A provision requiring the Utilities Commission to establish a program where Duke would help finance energy efficiency upgrades in return for a charge that is lower than the anticipated energy savings is not likely to benefit low-income people, Ripley said. Many low-income people either rent their homes and cannot make changes, Ripley added, or would need to make too many repairs to make energy efficiency financially feasible.
House Bill 951 generated criticism when it was introduced earlier this year after a small group of stakeholders and House Republicans negotiated the legislation behind closed doors.
In response to the initial bill, environmental groups raised concerns about legislative prescriptions for how Duke should replace the power generation from some coal-fired plants that will be retired by 2030. The original bill included the construction of natural gas-fired power plants, which release methane. Methane is a very strong, short-lasting greenhouse gas.
Business groups also opposed the original legislation, with textile manufacturers and some of the state’s largest companies saying it would mean debilitating rate hikes and could cause some businesses to leave the state.
This story was produced with financial support from 1Earth Fund, in partnership with Journalism Funding Partners, as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work.
This story was originally published October 1, 2021 at 12:05 PM with the headline "NC Republican leaders, Gov. Cooper reach compromise on controversial energy bill."